Trade agreement between the US and India: Time to regain business

India–US Trade Deal to Boost IT Services Sentiment, Deal Flow with American Clients

The trade deal announced between India and the United States is expected to lift sentiment in India’s export-driven IT services sector, which earns a majority of its revenue from the US market, industry experts said.

US President Donald Trump said tariffs would be reduced to 18% from 50%. Although the tariffs mainly targeted goods trade, the broader policy uncertainty had slowed spending by US enterprises, indirectly affecting India’s $283 billion IT services industry.

Phil Fersht, CEO of US-based IT advisory firm HfS Research, said geopolitical risks had begun to influence procurement decisions over the past year. “The deal improves confidence and tone, which matters when enterprises are making multi-year vendor commitments or deciding where to locate future work,” he said.

Earlier, uncertain macroeconomic conditions had delayed contract renewals by three to five months, with companies even adding geopolitical risk clauses to agreements.

Large Indian IT firms such as Tata Consultancy Services, Infosys, HCLTech, Wipro and Tech Mahindra generate 33–56% of their revenue from the US. Mid-sized companies including LTIMindtree, Persistent Systems, Coforge and Mphasis depend even more heavily on North America, with 56–83% of their revenue coming from the region.

Brokerage firm Motilal Oswal said the trade agreement could revive sentiment that had been hit by visa issues and negative perceptions around outsourcing, and help accelerate deal momentum. Technology has been listed as a key sector under the agreement, which could lead to more software and data-centre contracts.

Following the announcement, IT stocks rallied sharply. The Nifty IT index rose as much as 6% during the day, with shares of Infosys, TCS, Persistent Systems and HCLTech posting gains of 1.5–3%.

However, experts warned of short-term challenges. Jimit Arora, CEO of Everest Group, said the sharp strengthening of the rupee could reduce some cost advantages for IT companies. The rupee surged 1.35% to 90.26 per dollar, marking its biggest single-day gain in over seven years.

Still, analysts believe improved trade relations could benefit the sector further, especially if visa policies such as H-1B rules also become more favourable.